According to data released by the FMDQ Exchange on Tuesday, the value of foreign exchange transactions on the official Nigeria Autonomous Foreign Exchange Market has surged to $584 million. This marks a notable rise from the previously recorded daily transaction figure of $440 million on the platform. This increase coincides with the depreciation of the Naira against the United States dollar at the official market on Tuesday. The closing rate stood at N1433 per dollar, compared to the previous day’s rate of N1419 per dollar.
On Tuesday, according to data provided by FMDQ Securities Exchange, the forex turnover surged to $584.53 million from $440.13 million recorded on Monday, marking an increase of $144.4 million or 32.8 percent.
This significant boost in liquidity is attributed to measures implemented by the Central Bank of Nigeria aimed at stabilizing the foreign exchange rate.
In addition to commercial banks, entities such as the Central Bank of Nigeria, oil firms, and multinational corporations also participate in the sale of dollars at the Nigerian Autonomous Foreign Exchange Market.
Last week, the apex bank rolled out new circulars and guidelines to boost liquidity and narrow the gap between the parallel and official rates of the foreign exchange market. In its most significant foreign exchange guideline, last week, the CBN ordered banks to adjust their FX exposures.
In its circular titled, “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, the apex bank expressed worry over the growing trend of banks holding large foreign currency positions.
It said, “The Central Bank of Nigeria has noted with concern the growth in foreign currency exposures of banks through their Net Open Position. This has created an incentive for banks to hold excess long foreign currency positions, which exposes banks to foreign exchange and other risks.”
The CBN mandated that banks’ NOP must not exceed 20 per cent short or 0 per cent long of the bank’s shareholders’ funds going forward. It gave a February 1, 2024 deadline to those who had exceeded its limit.
In response, the national currency gained thrice at the official market following the adjustments.
The naira closed at N1,455.59/$ on Wednesday, 1,445/$ on Thursday, and N1435.53/$ on Friday last week.
After trading on Tuesday, the naira depreciated marginally by 0.85 per cent as the dollar was quoted at N1,433.89, stronger than N1,421.70 quoted on Monday at the NAFEM market.
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However, a Bureau De Change Operator, speaking to The PUNCH said the dollar was traded between N1,480 and N1,485 to the dollar at the parallel market.
He stated, “Today’s market was not too good but the dollar was sold between the rate of N1,480 and N1,485 to the dollar.
Abubakar Taura, said, “Dollar increased to N1,460 today and that is the last price.”
However, another BDC, Suraju, complained of the exorbitant price of the dollar, adding he didn’t trade with the greenback.
He said, “I don’t know the price for today because I didn’t sell at the market. The price for the dollar is too much and I can’t afford it.”
However, economic managers have said the naira will firm up in both markets in the coming days.
Source: Punch
